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Informist, Thursday, Jul. 23, 2026

By Cassandra Carvalho

MUMBAI – The one-day interbank call money rate ended above the Reserve Bank of India's repo rate Thursday due to urgent demand for funds after the tri-party repo market shut, with some traders speculating outflows related to the central bank's intervention in foreign exchange spot market, dealers said. However, in the second half of the session, the one-day tri-party repo rate plunged to nearly a four-month low of 4.00%, as per data from the NSE Cogencis WorkStation. Mutual funds likely received some inflows late in trade and chose to deploy the funds in the tri-party market, dealers said. 

"We've been lending in TREPS but not at such low rates, but mutual funds would definitely have been one of the reasons for the fall in rates," a dealer at a mutual fund said. "But we're also puzzled because CP, CD (commercial paper, certificates of deposit) rates haven't reflected such a fall."

Due to ample funds parked by banks under the Standing Deposit Facility and inflows from foreign currency non-convertible bank deposits, most banks have adequate funds with no major scheduled outflows post goods and services tax, even as systemic liquidity was neutral Wednesday, dealers said. Even if banks received excess funds, they preferred parking it under SDF instead of lending it at 100 basis points lower in the TREPS market, dealers said. Rates in the tri-party repo market gradually fell further during the day, they said. Some investors received inflows locked up in initial public offerings Thursday, aiding a fall in rates in the second half of trade, dealers said. 

"Banks have enough average liquidity, with more inflows coming in from the FCNR deposits," a dealer at a state-owned bank said. "There is no demand from banks, and whatever funds we have, we'd prefer to put in SDF." 

The one-day call money rate ended at 5.28% Thursday, up from 5.00% at close Wednesday. The weighted average call rate was also 5.28%, down from 5.38% Wednesday. The volume in the market was INR 156.40 billion Thursday, slightly higher than INR 152.78 billion the previous session. The one-day tri-party repo rate ended at 4.95%, lower than 5.00% Wednesday. The weighted average rate was 5.02%, sharply down from the previous day's 5.22%. The volume in the TREPS market was INR 4.77 trillion, higher than INR 4.62 trillion in the previous session.

OUTLOOK

On Friday, the three-day interbank call money rate is seen opening near the RBI's repo rate of 5.25% on early funding requirements from banks and primary dealerships amid tight liquidity after outflows for goods and service tax payments this week, dealers said. However, later in the day, the rates may fall as most banks have adequate funds with no major outflow for the next few sessions. Traders will also assess the drain on rupee liquidity due to the RBI's dollar sales in the foreign exchange spot market, which is likely to take systemic liquidity into deficit after becoming neutral this week.

Some traders expect the RBI to continue to hold VRRs until the Centre's month-end expenditure begins, though others differ due to poor subscription at previous operations recently. Two VRRs totalling INR 414.90 billion reverse Friday, due to which some traders expect the RBI to conduct a VRR for INR 500 billion or lesser. Traders do not expect the RBI to conduct any measures to infuse durable liquidity amid inflows from foreign non-currency resident bank deposits. Dealers expect the call rate at 4.60–5.40% Friday. The tri-party repo rate is expected to be in the 4.60–5.25% band. The weighted average call rate is expected to be in the 5.25–5.35% band, and that in the tri-party repo market is likely to be in the 5.10–5.25% band, they said.

CALL RATE

5.28%--Thursday close for one-day loans

5.35%--Thursday open for one-day loans

5.00%--Wednesday close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Below SDF rate; tri-party repo rate slumps near close

NEW DELHI – The one-day interbank call money rate was below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% due to poor demand for funds from banks, dealers said. The tri-party repo rate slumped to its lowest in nearly four months before recovering by the end of trade, likely due to a large mutual fund lending cheaply in the market, they said. 

"It has to be a mutual fund who had cash to deploy before the (tri-party repo) market close," a dealer at a foreign bank said. "Banks anyway have limited demand today (Thursday), the money market rates have been falling through the day."

The tri-party repo rate fell to 4.00% at the day's low, the lowest level for a weekday since Apr. 2, after slipping below the SDF rate as early as 1200 IST. Some banks took advantage of the low rate to borrow in the tri-party repo market as mutual funds were offering cheap overnight funds, dealers said.

The tri-party repo rate for one-day loans closed at 4.95%, down from 5.23% at the open and 5.00% Wednesday. The weighted average rate was 5.02%, sharply down from 5.22% Wednesday. The volume in the tri-party market rose to INR 4.73 trillion, compared with INR 4.59 trillion Wednesday.

At 1740 IST, the one-day call rate was 4.80%, down from 5.35% at the open and 5.00% at close Wednesday. The weighted average call rate was 5.28%, down from 5.38% Wednesday. The volume at the same time was INR 135.22 billion, similar to the volume at 1730 IST Wednesday.  (Aaryan Khanna)

India Call: Above repo on early demand for funds from PDs; bks' demand down

NEW DELHI – The one-day interbank call rate money rate was above the Reserve Bank of India's repo rate of 5.25% due to early demand for funds from primary dealers. Demand from banks was lower than the previous day as they had comfortable cash holdings despite the systemic liquidity surplus falling to near neutral, dealers said.

At 1000 IST, the one-day call rate was 5.35%, higher than 5.00% Wednesday. The weighted average call rate was 5.35%, lower than 5.38% Wednesday. The volume at the same time was INR 48.60 billion, compared with INR 72.20 billion at 1030 IST Tuesday.

At 1000 IST, the tri-party repo rate for one-day loans was 5.21%, sharply higher than 5.00% Wednesday. The weighted average rate was 5.21%, similar to 5.22% Wednesday. The volume in the tri-party market at the same time was INR 2.04 trillion, compared with INR 2.35 trillion at 1030 IST Wednesday.

Both the weighted call and tri-party repo rates are expected to be much lower than Wednesday with banks having met funding requirements through the RBI's liquidity injections earlier this week. The central bank has conducted VRR auctions of seven-, three- and two-day tenures so far, injecting over INR 1.1 trillion into the banking system. This has had the impact of dragging down the calculation of systemic liquidity even as it adds to the cash available to banks, dealers said. 

The RBI's net liquidity absorbed – a proxy for the systemic liquidity surplus – was INR 28.84 billion Wednesday, the lowest since a deficit on Jun. 29 and down from INR 92.89 billion Tuesday. There was a scheduled net drain on around INR 200 billion of liquidity Wednesday due to the settlement of the state bond auction, offset slightly by bond coupon payments by the Centre and states. Banks reduced their cash balances with the RBI from the previous day but held it above the average daily requirement of INR 8.16 trillion for the reporting fortnight ending Jul. 31

"It feels more like liquidity is in an INR 1 trillion surplus than near zero," a dealer at a state-owned bank said. "If you look at it, SDF (Standing Deposit Facility) has around INR 1.3 trillion of funds, then banks have also borrowed substantially in the VRRs (variable rate repo auctions). So most banks who were borrowing even yesterday (Wednesday) are not approaching the market today (Thursday)."

Traders do not expect the RBI to announce or conduct a VRR auction Thursday but said the central bank may roll over prior maturities due on Friday by announcing an auction. There are no scheduled inflows or outflows Thursday, mutual funds were comfortable lending in the tri-party repo market, and foreign currency non-resident bank deposits were picking up, dealers said. This would contribute to money market rates easing even before the government's month-end spending kicks in next week, they said.  (Aaryan Khanna)

End

US$1 = INR 96.5725

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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